CIBC to pay $149.5 million to Lehman, ending dispute

A pedestrian walks past a CIBC branch in Montreal, February 25, 2010.

Credit: Reuters/Christinne Muschi

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Private equity firms to buy Duff & Phelps for $665 million

NEW YORK | Sun Dec 30, 2012 5:05pm EST

NEW YORK (Reuters) - A group of private equity firms, including the Carlyle Group (CG.O), struck a deal on Sunday to buy financial advisory and investment banking firm Duff & Phelps Corp for about $665.5 million.

Duff & Phelps (DUF.N) said the firms will pay $15.55 a share to stockholders. The other buyers in the consortium are Stone Point Capital, Pictet & Cie and Edmond de Rothschild Group.

The buyers are offering a premium of 19.2 percent for the company, which closed at $13.05 a share on Friday.

The deal allows Duff & Phelps Corp. a "go-shop" period starting immediately and ending on February 8, 2013, during which it will seek higher offers from other potential buyers.

Centerview Partners is advising Duff & Phelps on the deal, while Sandler O'Neill and Partners, Credit Suisse, Barclays, and RBC Capital Markets are advising the private equity firms.

The agreement includes a break-up fee of $6.65 million from Duff & Phelps if the company abandons the deal for a higher offer before March 8, 2013.

Duff and Phelps Corp. advises clients on areas such as valuation, transactions, financial restructuring, alternative assets, disputes and taxation. It employs more than 1,000 people and has offices in North America, Europe, and Asia.

(Reporting by Sam Forgione; Editing by Jan Paschal)

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Ford on track to sell 2.2 million cars in U.S. this year

A logo of a Ford car is pictured during a press presentation prior to the Essen Motor Show in Essen November 30, 2012.

Credit: Reuters/Ina Fassbender

By Deepa Seetharaman

DETROIT | Sat Dec 29, 2012 9:11pm EST

DETROIT (Reuters) - Ford Motor Co is on track to sell 2.2 million cars under its main brand this year, up 7 percent from 2011, the automaker said on Saturday, but the company has acknowledged losing market share as it struggled to keep up with consumer demand.

It marks the second straight year the No. 2 U.S. automaker has surpassed the 2 million threshold.

The projected sales jump for the Ford brand falls short of the overall industry's gains, which many analysts expect to exceed 13 percent in 2012.

This year is the third in a row that industry sales have climbed by double digits, as American automakers rebound from a deep recession that pushed Ford's rivals, General Motors Co and Chrysler Group LLC, into bankruptcy in 2009.

Earlier this year, Ford said it expected to lose market share in the United States because it could not build enough cars and trucks to satisfy consumer demand. Consumers also are buying fewer pickup trucks than in past years.

Last year, Ford sold just under 2.1 million cars and trucks under its main brand in the United States. When adding its upscale Lincoln brand, Ford sold more than 2.1 million cars last year.

(Editing by Dan Wilchins, Steve Gorman and Peter Cooney)

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Watchdog fines Wall Street firms $4.5 million for lobbyist payments

n">(Reuters) - Wall Street's watchdog has fined five large firms over $4.48 million for seeking reimbursement for payments to lobbyists using proceeds from municipal and state bond offerings.

The Financial Industry Regulatory Authority said on Thursday that it fined Citigroup Inc, Goldman Sachs Group Inc, JPMorgan Chase & Co, Bank of America Corp's Merrill Lynch and Morgan Stanley.

Wall Street's self-imposed watchdog said the banks unfairly sought reimbursement of fees they paid to the California Public Securities Association between January 2006 and December 2010 by requesting they be refunded as underwriting expenses from the bond sales.

FINRA said the firms "violated" fair dealing and supervisory rules of the Municipal Securities Rulemaking Board by seeking reimbursement for those payments to Cal PSA, a political association whose activities include lobbying on behalf of companies seeking to influence California state government.

"It was unfair for these underwriters to pass along the costs of their Cal PSA membership to the municipal and state bond taxpayers, neglecting to disclose that these costs were unrelated to the bond deals," FINRA's chief of enforcement, Brad Bennett, said in a statement.

The firms, which were fined more than $3.35 million and are required to pay $1.13 million in restitution to certain issuers in California, neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

"We are pleased to resolve this matter and look forward to putting this behind us," Citi spokesman Scott Helfman said.

Morgan Stanley spokesman Mark Lake also said the firm is "pleased to have resolved this issue in a satisfactory manner for the firm."

Goldman Sachs said the company voluntarily refunded publicly disclosed Cal PSA fees in February 2011 for those charged as underwriting expenses on state-level issuances it lead underwrote, at the request of California's treasurer's office.

"At that time, we also discontinued the longstanding industry-wide practice of seeking reimbursement for such fees on offerings by state and local governments in California," said Goldman spokeswoman Tiffany Galvin. "We're pleased to have resolved this matter."

Merrill did not immediately comment on the sanction. JPMorgan declined to comment.

(Reporting By Ashley Lau and Lauren Tara LaCapra in New York; editing by Andrew Hay)

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Exclusive: San Bernardino paid $2 million in cash-outs before bankruptcy filing

A sign advertising bankruptcy filing is seen hanging off a road sign in San Bernardino, California September 11, 2012.

Credit: Reuters/Lucy Nicholson

By Tim Reid and Cezary Podkul and Ryan McNeill

LOS ANGELES | Thu Dec 20, 2012 7:38pm EST

LOS ANGELES (Reuters) - The California city of San Bernardino paid $2 million in cash-outs to employees for unused vacation and sick time in the three months before declaring bankruptcy on August 1, data reviewed by Reuters show.

City officials chalked up the payment spurt to coincidence and other factors. Still, the payments may run afoul of a core provision of the bankruptcy code that imposes strict rules on the types of payments that can be made immediately prior to a bankruptcy, according to bankruptcy lawyers who are not involved in the case.

In a court hearing scheduled for Friday, the city is expected to argue that it is so penniless that it needs bankruptcy protection and relief from payments owed to the California Public Employees Retirement System and other creditors.

Yet in July alone, the city paid $1.2 million to 33 employees for unused sick and vacation time, with more than half of that paid out the day before the bankruptcy filing. The next highest similar total for a recent July was $471,149, in 2010. Reuters analyzed city data from 2008 to this year obtained through a public-records request.

In the three months before the bankruptcy, 51 city workers received sick and vacation time payouts totaling $2 million. Most of the workers received the payments as part of their retirement, as provided for in union contracts, city officials said.

Rhonda Haynes, the city's acting human-resources director, said the timing of the payouts was a coincidence. July 31 is the normal cash-out payment date for employees who retired and received their final wage check on July 15, she said. Other city officials also suggested that general anxiety among older workers over the city's finances led to a blip in retirements.

Legal analysts said the cash-outs immediately prior to bankruptcy filing were troubling and could be a breach of the federal bankruptcy code. Payments made by a debtor 90 days prior to a filing can be subject to clawback if they are found to be "preferential." Preference payments violate the bankruptcy code, a civil statute that does not provide for criminal sanctions.

"It looks really bad and it needs to be investigated," said Karol Denniston, an expert in municipal bankruptcy at Schiff Hardin law firm in San Francisco who is not involved in the San Bernardino case.

"If you want to say you can't make payroll, but can pay $2 million to your employees while not paying other creditors, those are questions all creditors will be asking," Denniston said.

Michael Sweet, a bankruptcy attorney with Fox Rothschild who is not involved in the San Bernardino case, said: "This looks like they are were trying to take care of certain employees, and that is precisely what the bankruptcy code is designed to protect - preferring one creditor over another."

OTHER EXPLANATIONS

City officials said there were good reasons for the spike. Asked why the number of cash-out payments in May, June and July were abnormally high, acting HR director Haynes said in an email provided by the city clerk's office: "My guess is because you have a lot of retirements at the end of the fiscal year."

Haynes said the city has no formal written policy governing cash-outs. "Normal practice" was that once an employee retired and received their final paycheck, the retiree would automatically receive a cash-out payment for unused sick and vacation time under the terms of their employment with the city, she said.

The retirement spike could also have been a result of some older employees' choosing to retire in light of the city's well-known financial woes.

"People were sensitive to how the city's finances could affect them," said Gigi Hanna, the city clerk. "There were certainly discussions in my department over whether it was better to retire now or wait it out."

The city was trying to reduce its workforce to cut costs. City attorney James Penman told the city council on November 5 that in his department, "we urged several people to retire, which they did and weren't necessarily ready to do so."

Penman was arguing in that council session for the re-hiring of Henry Empeno Jr.

Empeno, senior deputy in the city attorney's office, retired from the workforce with cash-out payments of $89,583 shortly before August 1 bankruptcy filing. On November 5, the city council approved Empeno's re-hiring on a monthly salary of $11,307 a month, and total annual salary and benefits of $161,140. The effective date for his reinstatement is December 26, according to the city clerk's office.

San Bernardino's acting city manager and the city's finance director did not respond to emails asking who authorized the cash-outs.

TOP RECIPIENTS

Haynes said cash-outs can only be paid when a city employee retires from the workforce. The city data reviewed by Reuters, however, showed that seven employees who received cash-out payments in the three months prior to the filing also received wage checks afterward.

Gigi Hanna, the city clerk, said some retired workers - such as Empeno - had been hired back as contractors, but could not provide further detail.

The city council voted to suspend cash-outs to its workers shortly after it filed for bankruptcy and to award them on a case-by-case basis.

Hanna, the city clerk, said in an email: "The city manager has the ultimate authority to approve cash-outs for all employees. As for the large number of retirements during that three month period...the budget discussions began in April and it was clear from what was being discussed in open session that the city was in serious financial straits."

The city of 210,000, about 60 miles east of Los Angeles, filed for Chapter 9 bankruptcy protection citing a $46 million deficit for this fiscal year.

The amount of cash-outs in May, June and July of this year was the highest for any three-month period in the data reviewed by Reuters.

The pre-bankruptcy cash-outs included David Harp, a police lieutenant, who walked away with $123,156, the third-highest amount during the period. Theodis Henson Jr, a police captain, left with $234,907, while Brian Boom, another lieutenant, departed with $171,110.

Harp, 58, left after 35 years with the San Bernardino Police Department and said it was "time to go." He'd been planning to retire for two years, he said, and gave city officials two weeks' notice.

"People knew I was going to leave," he said. The bankruptcy had no effect on his decision, he said. He noted that San Bernardino's financial troubles were not new, and "you'd have to be a blind man not to see what was going on."

Empeno did not respond to a message left with the city attorney's office or an email sent to his work account. Attempts to contact Boom were not successful.

COURT SHOWDOWN

Friday's hearing will be the first time San Bernardino's biggest creditors - the California Public Employees' Retirement System (Calpers), and Wall Street bondholders and insurers - will meet to argue their case before the judge overseeing the city's bankruptcy application.

The case is emerging as a landmark legal battle over whether the pensions of government workers take precedence over other payments in a municipal bankruptcy, which could have ramifications for municipal creditors, including Wall Street bondholders, as more cities and towns have trouble meeting their obligations.

Calpers, San Bernardino's biggest creditor and America's biggest pension fund, is arguing that under California law it has primacy as a creditor and must continue to be paid in full, even in a bankruptcy. In its original bankruptcy filing, the city said its unfunded obligations to Calpers totaled $143.3 million.

Last week Calpers, which is opposing the city's request for protection, filed court papers denouncing what it called a "sham" bankruptcy. It accused the city of "criminal behavior" in withholding payments to the pension plan.

The city has failed to make its twice-monthly $1.2 million payments to Calpers since it filed for bankruptcy on August 1. City officials traveled to Calpers headquarters on December 5 to plead for more time to pay.

Calpers officials told Reuters they have little latitude to allow San Bernardino - or any other city that pays into its pension fund - to alter the payment schedule.

In its court filing last week, Calpers said the city had "buried its head in the sand", rather than deal with a long-standing financial crisis.

A Calpers spokesman said the cash-out payments were "something we will look at."

The city's second-largest creditor is Wells Fargo Bank, the trustee for nearly $50 million in pension-obligation bonds the city issued in 2005 to reduce its debt to Calpers.

(Reporting By Tim Reid.; Editing by Jonathan Weber and Michael Williams.)

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Mitsubishi Motors to recall 1.2 million cars to fix engine part

A Mitsubishi Motors logo is seen on display at the New York International Auto Show in New York City, April 20, 2011.

Credit: Reuters/Jessica Rinaldi

TOKYO | Wed Dec 19, 2012 3:10am EST

TOKYO (Reuters) - Mitsubishi Motors (7211.T) will recall about 1.2 million 660 cc minicar vehicles sold in Japan due to faulty engine oil seals, a part that prevents engine oil from leaking, the Japanese automaker said on Wednesday.

The move is likely to cost Mitsubishi about 7.5 billion yen ($89.3 million), and the costs have yet to be included in the firm's 2012/13 forecast, the company said in a statement.

No vehicles are affected outside of Japan and no accidents or injuries have been reported, a Mitsubishi spokesman said.

Mitsubishi will recall some Minica and Minicab models, as well as other 660 cc models, sold in Japan between 1996 to 2004.

This is the fourth time Mitsubishi is recalling cars over problematic engine oil seals, with the previous recall happening in March.

Japan's transport ministry said it will conduct on-site inspections and has ordered the automaker to report on improvement measures it has taken by end-March.

The seals could slip off and lead to engine oil leakage, which could halt the engine, the spokesman said.

Mitsubishi said it will add a plate that prevents the seal from slipping off, as well as exchange the seal for a new one in some cases.

($1 = 83.9850 Japanese yen)

(Reporting by Yoko Kubota; Editing by Jeremy Laurence and Muralikumar Anantharaman)

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Clearwire, Sprint set up $120 million breakup fee

n">(Reuters) - Sprint Corp promised to pay Clearwire Corp a $120 million breakup fee if its $2.2 billion purchase of roughly half of the smaller wireless service provider does not go ahead.

At the same time, Clearwire said on Tuesday it agreed to a "no-shop" provision, meaning it cannot seek other offers but could consider unsolicited offers.

Clearwire and Sprint, its majority owner, announced details of their merger agreement in a regulatory filing the day after Sprint agreed buy out the rest of Clearwire for $2.97 per share.

Clearwire shares traded below the offer price at $2.86, down 5 cents or 1.7 percent on the Nasdaq. Sprint was off 9 cents, or 1.6 percent, at $5.47 on the New York Stock Exchange.

Some shareholders said they were disappointed by the price, which requires approval from a majority of Clearwire's minority shareholders. While one shareholder is looking for support for a class action lawsuit against the deal, another held out hope for a higher bid.

Clearwire's chief executive said Monday that Sprint's offer was its best option, and that Clearwire could face a risk of bankruptcy if that deal is not approved.

The filing said Clearwire would be restricted from providing information to or engaging in discussions or negotiations with third parties regarding an acquisition proposal, subject to certain exceptions.

It did not disclose the exceptions in the filing.

The Clearwire deal is conditional on the sale of a 70 percent stake in Sprint to Japan's Softbank Corp for $20 billion. That deal is expected to close around mid-2013.

Sprint would have to pay the breakup fee if the Softbank deal does not happen, if it or Clearwire terminates the agreement, or if their deal has not been consummated on or before October 15, 2013, according to the filing.

Stifel Nicolaus analyst Christopher King said the decline in Clearwire's shares did not appear to indicate the deal was in any danger of being blocked.

"Its pretty much a done deal," King said.

So far, Sprint has support for the deal from Softbank and from at least three Clearwire shareholders owning 13 percent of the company - Intel Corp, Comcast Corp and cable company Bright House.

(Reporting by Sinead Carew; Editing by Lisa Von Ahn, Nick Zieminski and Jeffrey Benkoe)

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